How to Record Entries and Steps to Become a Bookkeeper 

Bookkeeping can be defined as the systematic process of recording, summarizing, analyzing, and storing financial transactions. It serves as the groundwork of a company’s accounting system, as it contains all the information that is needed for the preparation of financial statements, the filing of taxes, and planning. Businesses that practice accurate bookkeeping are in a position to make informed decisions that may be influenced by the reliability of the recorded figures. 

 

Steps in Recording Book keeping Entries
  • Transactions Identification 

Determination of the transaction’s nature and the accounts it impacts. 

  • Journal Entries 

The recording of transactions in the journal is categorized as debit and credit. 

  • Ledger Posting 

Journal entries transfer to a general ledger that differentiates transactions by account. 

  • Trail Balance 

Ensuring equalization of debits with credits and by summarizing all the ledger accounts. 

  • Adjustment of Entries 

Making important adjustments for accrued and deferred components. 

  • Financial Statements 

Based on the modified trail balance, prepare financial statements. 

 

Examples of Bookkeeping Entries

Example 1: Sales Transaction 

Suppose there is a business enterprise that sells goods and has a client who owes the business a sum of ₹ 50000 for those goods. In the books, this transaction is recorded as follows: ₹50,000 is debited to Accounts Receivable because the business recorded that it owns this money to somebody else, and ₹50,000 is credited to Sales Revenue because the business received this amount from the sale. 

Example 2: Purchase of Supplies 

If there was a purchase of office supplies for ₹ 5,000, which are paid in cash, this purchase is recorded by increasing the office supplies account by ₹5,000 since the supplies are now the property of the business and decreasing the cash account by ₹5,000 as the money paid for the supplies is gone. 

Example 3: Paying Salaries 

When the business pays ₹20,000 in salaries to its employees, this transaction is recorded by crediting Salaries Expense, an expense account, because the business lost ₹20,000, and debiting Cash, an asset account, because this is the account to which ₹20,000 is being subtracted. 

 

Steps to Become Book keeper
  • Education  

 Although it is not mandatory to do so, possessing a degree in accounting, finance, or any other relevant field is often considered an asset. Some of the basic courses one needs to study include those offered in commerce (B.Com.) or hold a diploma in accounting. 

  • Gain Experience  

Working experiences such as internships or entry-level positions are useful in terms of exposing the candidate to real-life bookkeeping scenarios. 

  • Certifications  

CA (Chartered Accountant), CMA (Cost Management Accountant), and CPA (Certified Public Accountant) certifications can add more value and employability in the field. 

  • Stay updated  

Staying updated on new accounting standards as well as new software helps through attending workshops, online courses, and professional development. 

 

Questions to Test your Understanding
  • While recording bookkeeping entries, which step is considered to be the first step?
  1. Ledger Posting
  2. Journal Entries
  3. Transactions Identification
  4. Financial Statements

 

  • In bookkeeping, which step equalizes the total debits with the total credits?
  1. Journal Entries
  2. Ledger Posting
  3. Financial Statements
  4. Trial Balance

 

  • Why is accuracy in bookkeeping for businesses important?
  1.  It helps in employee management
  2. Allowing businesses to make informed decisions
  3. Reducing cost of goods sold
  4.  It ensures compliance with labor laws

 

  • Which type of experience is essential for bookkeepers?
  1. Working in human resources
  2. Internships or entry-level positions in bookkeeping
  3. Experience in graphic design
  4.  Sales and marketing experience

 

  • Which of the following certifications is not common in the bookkeeping profession?
  1. CA (Chartered Accountant)
  2. CMA (Cost Management Accountant)
  3. CPA- Certified Public Accountant
  4. PMP (Project Management Professional)

 

 

Conclusion  

Bookkeeping entails the essential processes of recording, as they form the basis on which a company’s financial health and strategic planning for future growth depend. Thus, knowing the fundamentals of making entries and the route to becoming a bookkeeper in India, one can start a promising career in this vital direction. Education, skills, hard work, dedication, and passion to learn make bookkeepers meet the needs of the organizations that hire them by providing detailed records of their organizations’ financial performance. 

FAQ's
The first of these steps is transaction identification where it is necessary to determine the nature of the transaction and which accounts are affected.
Journal entries are recorded in the journal as transactions, which are grouped into debits and credits. 
Ledger posting is the process of transferring the journal entries to the general ledger accounts that group the transactions according to the accounts.
Trial balance is a statement that prepared to show all the ledger accounts for confirmation of the whole debits and total credits. 
It is not mandatory for a candidate to possess a degree but earning a degree in accounting, finance or relevant field will be an added advantage.
For those interested in becoming bookkeepers, internships or work experience through entry-level bookkeeping positions can be valuable.
Bookkeeper can improve his/her career with any of the certifications like CA (Chartered Accountant), CMA (Cost Management Accountant), CPA (Certified Public Accountant) etc.
One of the important elements is to keep abreast with new accounting standards as well as new-generation accounting software by attending workshops, online classes, and professional development.